GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Chapter 13, Problem 13.11E
Inferring Financial Information from Ratios E13-11 LO13-3 13-5
Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices. All stores are located in the United States, predominantly in small towns in 24 midwestern and southeastern states. In the current year, the company reported average inventories of $1,668 million and an inventory turnover ratio of 8.0. Average total fixed assets were $2,098 million, and the fixed asset turnover ratio was 9.0. What amount did Dollar General report as gross profit in the current year?
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Russell Department Stores, Inc.
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$480,000
100.0 %
total Liabilities
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total Liabilities and Stockholders' Equity $480,000 100.0 %
SOLVE for % of total (round total to one decimal place x.x%)
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Net Sales Revenue
780,000
Cost of goods sold
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gross profit
255,060
operating expenses
162240
operating income
92820
other expenses
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Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families in southern, eastern, and midwestern states. For the year ended January 31, 2014, the company reported averageinventories of $2,475 (in millions) and an inventory turnover of 4.89. Average total fixed assetswere $2,080 (million) and the fixed asset turnover ratio was 8.14.Required:1. Calculate Dollar General’s gross profit percentage (expressed as a percentage with one decimalplace). What does this imply about the amount of gross profit made from each dollar of sales?TIP: Work backward from the fixed asset turnover and inventory turnover ratios to compute theamounts needed for the gross profit percentage.2. Is this an improvement from the gross profit percentage of 31.7 percent earned during theprevious year?
The following table shows financial data (year 2004) for Costco Wholesale and Wal-Mart, two major U.S. retailers.
costco ($m)
walmart ($m)
inventory
3,643.00
29,447.00
sales(net)
48,106.00
286,103.00
COGS
41,651.00
215,493.00
Assume that both companies have an average annual holding cost rate of 30 percent (i.e., it costs both retailers $3 to hold an item that they procured for $10 for one entire year). a. How many days, on average, does a product stay in Costco's inventory before it is sold? Assume that stores are operated 365 days a year. b. How much lower is, on average, the inventory cost for Costco compared to Wal-Mart of a household cleaner valued at $5 COGS? Assume that the unit cost of the household cleaner is the same for both companies and that the price and the inventory turns of an item are independent.
Chapter 13 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
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